Travel insurance needs to cover airline failures

You’d think that your holiday travel insurance would cover airline failures. Surprisingly most of them don’t. Why should we be punished for the failure of airline companies?

Three in four travel insurance policies don’t cover scheduled airline failures (just a fancy name for an airline going bust), so says Defaqto.

It’s a surprising and worrying statistic if you, like most of us, want to be protected from anything that gets in the way of your precious holiday destination.

In our own research, we found a slightly higher percentage of insurers (41%) covering airline failure – with more offering it for an extra premium. But this still isn’t good enough.

When we asked why this cover wasn’t included as standard in most policies, the Association of British Insurers told us that the purpose of insurance was to cover people for their personal circumstances and not economic failures.

Hmm, I’d argue that an airline going bust does have quite a significant impact on an individual’s holiday circumstances and should be something that’s included as standard.

When we investigated insurance policies in more detail, Which? Holiday also found a number of other common exclusions. These ranged from the ordinary, like missing your flight because of traffic jams – to the extraordinary, such as not being covered if you’re caught up in a terrorist attack.

Let’s face it, none of us wants to read the small print in these policies – it’s boring. But, if exclusions like these mean that we have to pay more, or miss out on our holiday altogether, insurance companies must do more to inform us about them.

This is a misleading report, by quoting on a percentage of insurers including Scheduled Airline Failure Insurance. The fact is this does not reflect on total number of travel insurance policies issued that include such cover. All the major travel insurers now include it and their number of polcies issued represents a significant amount of overall policies issued in the UK today. Examples are AA Travel Insurance, Direct Line, Post Office, Saga, British Airways, Tesco's, Flybe, Ryaniar, Easyjet, Columbus, Opodo – just a few names of many. However there are still a number of policies that do not include cover and so people must check their cover when taking out travel insurance.

Travel Insurance is marketed on price.
Reviews and comparisons by newspapers and even Which concentrate on price or value.
Little publicity or weight is given to "best or widest cover" or useful features ( like loss of passport before travel).
So its not surprising that insurance companies pare down the cover to a minimum.

In February 2009 we were trapped by a heavy snowfall and with no public transport available and couldn't use our car nor find a taxi or car hire firm to get us to Gatwick which is 15 minutes away. Despite this, our travel insurer warned that it wouldn't refund our holiday costs if the airline had not cancelled the flight which it hadn't because Gatwick airport was open and at that time had not had the amount of snow and extreme freezing conditions we were experiencing.

I was in Canada at the end of January this year when a snowstorm along the eastern seaboard caused my connecting flight from St John’s to Halifax ( where I was booked on the overnight flight back to Britain) to be cancelled. I had to find hotel accomodation at 9 o’clock in the evening – Air Canada doesn’t cover that. I was re-booked to travel the following afternoon. However, I felt confident that Saga insurance (advertises it will not leave you stranded) would cover the extra expense I incurred. I was very wrong – the policy states that if a connecting flight is “delayed” causing the passenger to miss the flight back to Britain,said passenger will have the claim met… but if the connecting flight is “cancelled” causing the flight back to Britain to be missed, the policy holder has no claim!!! It appears that one does not become “stranded” if a flight is cancelled but only when it is delayed. Beware Saga – disappointingly no better than the competition.